THE EFFECT OF NEWER DRUGS ON SURVIVAL

August 25, 2005

Patients suffering from serious illnesses such as heart disease, diabetes and cancer who use newer drugs are likely to live longer than patients using drugs approved by the Food and Drug Administration in earlier years, says National Bureau of Economic Research Associate Frank Lichtenberg.

Lichtenberg's data mainly comes from information recorded by Puerto Rico's Health Insurance Administration (ASES), which contracts with private managed care organizations to provide services to Medicaid patients and accounts for 40 percent of Puerto Rico's population. His sample includes data on over 500,000 Medicaid patients.

In his study, Lichtenberg analyzes the impact of the vintage of drugs used to treat patients on their probability of survival, conditional demographic characteristics, their use of medical services and the nature and complexity of their illness.

ASES beneficiaries using new drugs during January-June 2000 were less likely to die by the end of 2002.

The newer the drugs patients were taking, the lower the mortality rate -- for example: 4.4 percent for pre-1970 drugs, 3.6 percent for 1970s drugs, 3.0 for 1980s, and 2.5 percent for drugs introduced in the 1990s.

Puerto Ricans receive older medications than U.S. Medicaid patients and estimates suggest that if the ASES vintage distribution were the same as U.S. Medicaid's, the mortality rates would have been cut 5.3 percent.

Estimates for subgroups of people with specific diseases display the same general pattern. However, Lichtenberg cautions that in this study, they did not control for the effect of the vintage of medical products and services other than drugs on survival, and this may have affected their estimates.

Source: National Bureau of Economic Research, "The Effect of Newer Drugs on Survival," August 15, 2005; based upon: Frank R. Lichtenberg, "The Effect of Drug Vintage on Survival: Micro Evidence from Puerto Rico's Medicaid Program," National Bureau of Economic Research, Working Paper No. 10884, November 2004.